Learn: Business Structures

Welcome!Today we'll learn about business structures. This is an important topic because it explains the different ways businesses can be organised and the implications for ownership, liability, and decision-making.

What are Business Structures?A business structure refers to the legal and organisational framework a business uses to operate. It determines ownership, liability, and decision-making processes. Choosing the right structure is crucial for efficiency and success.

Types of Business StructuresThere are several types of business structures, each with its own characteristics. Let's explore them:

Sole TraderA sole trader is a business owned and run by one person. It is easy to set up and has minimal legal requirements, but the owner has unlimited liability, meaning they are personally responsible for all debts.

PartnershipA partnership involves two or more people sharing ownership and running the business. Partners share profits and responsibilities but also have unlimited liability, unless they set up a limited partnership.

Limited CompaniesA limited company is a business with a separate legal identity from its owners. Owners (shareholders) have limited liability, meaning they only risk losing their investment, not personal assets.

Liability TypesUnlimited liability means the owner is personally responsible for all debts. Limited liability means the owner's risk is limited to their investment in the business.

Public vs Private SectorThe private sector includes businesses owned by private individuals or organisations, such as sole traders and limited companies. The public sector involves organisations owned and run by the government, like schools and hospitals.

Review Time!Great work! You've learned about different business structures, liability types, and the public vs private sectors. Now let's test your understanding with a few questions.